It was an US$80 billion takeover bid that stole the front and business pages of newspapers around the world, but for now a merged 21st Century Fox-Time Warner remains a pipe dream. 21st Century Fox has announced that it has withdrawn its proposal to acquire Time Warner Inc.
Chairman and CEO of 21st Century Fox, Rupert Murdoch said:
“We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands…However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling. Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders. These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer.
With the takeover proposal now withdrawn the Board of 21st Century Fox has authorised a US$6 billion share repurchase program (of Class A Common Stock) which is expected to be completed in the next 12 months.
In response to the withdrawal, Time Warner Inc. said that:
“Time Warner’s Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders. Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable network group, and the world’s largest film and television studio. We thank our stockholders for their continued support.”
While 21st Century Fox’s bid is now off the table, there is no doubt that media companies are looking to expand. Content creators in particular are looking to grow their businesses to ensure that they own content that consumers want and therefore such content can be sold to pay-TV and streaming services at a premium price. Without compelling content a cable or streaming service will struggle to survive.
Rupert Murdoch said in 2010 that:
“content is not just king, it is the emperor of all things electronic. Clever technology is merely an empty vessel without any great content.”
This statement remains true, as there is no point in having a content delivery system if there is no content to deliver.